What the Israel-Hamas War Means (and Doesn’t Mean) for Venezuela

Six questions to assess whether events in the Middle East can affect Venezuelan oil and politics

The regimes of Venezuela and Iran are back in the eye of the storm after months of careful negotiations with the Biden administration | Photo: AP

Perhaps confusingly, news that the U.S. would lift sanctions against Venezuela came just days after Israel and Palestine entered a new, devastating chapter in their history. This is not to say that the new OFAC General License was in some way contingent on the war’s emergence. But Caracas does have diverse and salient connections with major actors in this war: OPEC members and competitors, business partners, troubleshooters, and rivals—whose policies and behaviors can benefit or hinder Maduro. Namely the U.S., Iran, Saudi Arabia, and Qatar.

With the help of energy and political economy experts Francisco Monaldi and Antulio Rosales, we made a Q&A to break down where the war and sanctions relief actually inform Venezuelan politics and foreign relations—and where they don’t necessarily.

Energy prices will rise abruptly with the Israel-Hamas War (as with Ukraine and Russia before that) and Maduro will have tons of fresh oil money to spend in the next few months. True or false?

Well, prices partially depend on Middle East politics and armed conflicts, and the landscape is quite positive for Maduro. Crude oil has been circling the $90 mark after Hamas attacked Israel on October 7, which is already very high. It may continue rising mainly for two reasons. Through OPEC+, Saudi Arabia continues its policy of production cuts to keep prices up. The cartel announced a further output cut of 2m barrels per day (the number is likely closer to 1m in reality) on October 6, the biggest since the pandemic started according to Quartz.

Secondly, fighting in Gaza won’t cease and may spill across the region, involving militant actors linked to Iran. Iran’s oil production has risen following cooperation and lenient sanctions enforcement from the Biden administration. That may change (i.e. Iranian barrels are suddenly blocked) if Tehran’s proxies were to repeatedly engage IDF or U.S. positions in new fronts in Syria, Iraq and Northern Israel. Republicans are calling to punish the Ayatollah regime with heavier economic restrictions for its links with Hamas, though there isn’t conclusive evidence that Tehran greenlighted the latter’s attack on October 7.

The current prices and scenarios above are excellent news for Maduro, given that, with the new OFAC General License, Venezuela will now sell crude and derived products without discounts. However, we won’t see a prominent rise in output overnight as the state of Venezuela’s oil industry is dire on many levels.

In this war context, Venezuela’s oil industry is a potential “relief valve” for US and European energy needs. True or false?

False. Venezuela’s oil output sits at around 750,000 bpd. Before the US announced it was provisionally lifting sanctions, Rice University professor Francisco Monaldi forecasted that production could rise by 200,000 in 2024. That is less than 0.2% of global production. We are yet to know how many, or to what extent foreign companies will come to Venezuela and invest in new projects ahead of sanctions relief. Reuters reported on October 25 that UAE-based Tradeco and Asia Charm have already signed spot-sale contracts with PDVSA to export fuel oil and asphalt cement. PDVSA is set to receive prepayments from both.

“Board members at energy companies must be considering very carefully whether to invest. The levels of risk and uncertainty are still very high, not just in Venezuela,” Monaldi says. “For instance, if Trump becomes president again, we can’t know for sure if he’d leave sanctions in place or become friends with Maduro.”

Added production could definitely be higher under these new circumstances, however. “When crude prices are high, a thousand things are possible,” Monaldi continues. “It costs $10 a barrel to produce crude in Venezuela… If you can sell at $80, returns are simply brutal.” In the coming weeks, Monaldi reminds us to watch out for announcements from Maurel & Prom (France), ONGC (India), Eni, and Repsol –all of which had recently lobbied for Chevron-style licenses.

So the U.S. may have reasons to negotiate with Venezuela separate from the Middle East crisis and any resulting oil trade disruptions. Is that right?

Absolutely. To be clear, Chavista negotiator Jorge Rodríguez and Juan González (a key U.S. policymaker for Venezuelan affairs) held conversations since at least June, when El País leaked that they met in Qatar. This happened three months before Hamas infiltrated and attacked Israel.

The Biden administration is actually more concerned with solving the refugee crisis in the Mexico-U.S. border, where fleeing Venezuelans are massively showing up. Only in September, US authorities apprehended over 50,000 Venezuelans in the country’s south, it’s the greatest number of migrants from a country other than Mexico registered there in a single month.

“The U.S. is interested in loosening economic strains in Venezuela to remove some pressure,” says Antulio Rosales. “Biden can then sell it as a means to reduce an influx of migrants that Republicans criticize heavily.”

Maduro and the State Department even agreed to resume deportation flights of Venezuelans before the Barbados Accords were announced, probably a signal of the issue’s prominence in Washington.

What happens now between Maduro and the Ayatollah? Tehran is under heavy fire for its links to Hamas and other radical Muslim groups, while Caracas has a new agreement with Washington. Would that represent a problem between them?

Maduro and Khamenei will remain pals, and well within the orbit of authoritarian states like Russia and China. Their positions aren’t too different either. In Venezuela’s case, consider that the new OFAC license expires in April and sanctions can be re-imposed if Miraflores violates the agreements. In a similar vein, the Biden administration has sought better relations with Tehran to restore cooperation over nuclear deterrence. In September, both countries exchanged some prisoners and the White House unfroze $6bn in Iranian assets (again, Qatar mediated). Khamenei praised Hamas’ operation in Israel, but needs to handle allies like Hezbollah to avoid spillage and compromise a recent “understanding” with the White House.

Therefore, both Maduro and the Ayatollah are in positions where they need to tread lightly if they want to keep receiving concessions and funds from Washington. But these agreements can be quickly trampled or reversed. Neither will abandon their shared aversion and anti-American rhetoric. Both countries have also resisted U.S. sanctions in the past by trading Venezuelan jet fuel for Iranian gasoline.

Qatar seems to be everywhere. What’s Doha’s endgame in Venezuela and the Middle East?

Well, the Al-Thani monarchy has a strong record mediating proxy disputes between Iran and Saudi Arabia, and has recently assisted American diplomatic endeavors in the Middle East. The tiny, super-rich Gulf state is in fact a key strategic partner of NATO and Washington, holding the largest American base in the region and, at the same time, has solid relations with Iran and its allies. Not just the likes of Hamas and the Taliban, but Maduro and the Rodríguez siblings.

Vice President Delcy has grown closer with Sheikhs Tamim and Mohammed since at least 2021. Unlike the Iranian clerics, Qatari royals are willing to meet in person with a female politician and even invited Delcy to the World Cup opening ceremony. Qatar has apparently fostered links with the Venezuelan football federation, whose young president is reportedly close to Delcy. Coupled with a knack for media and sports investment, the Al Thanis’ rare air of progressiveness and impartiality is an element of Doha’s soft power package. Miraflores also defended Qatar against criticism for human rights violations committed while the country prepared to host the World Cup.

So Doha keeps scoring diplomatic points in the White House, having hosted the build-up to Barbados, and now mediating the (much higher-risk) hostage situation in Palestine. Our guess is that Qatar provides a trusted safe space for secret talks, shielding Maduro and Biden representatives from leaks and biased agendas. It’s simply seen as a reliable alternative to unstable, parachute brokers like Petro or AMLO. Information about concrete Qatari interests in Venezuela is scarce and superficial, but Monaldi notes that Gulf states are generally astonished and puzzled by the state of PDVSA and our oil industry.

“Actors in the Middle East always have an eye on Venezuela, and may now be smelling opportunities,” Monaldi notes. Don’t forget that Qatar is a gas superpower and a key LNG supplier to Europe. With Eni, Repsol and potentially others back in Venezuela doing business, Doha may want to become another source of investment and knowledge sharing in the long term. Venezuela has also been pitching a mega-tourism project for La Tortuga to potential MENA investor countries. In September, former Foreign Minister Félix Plasencia discussed the matter with a Qatari delegation.

By the way: Shell is now set to export Venezuelan gas to Trinidad from the Dragon field, a natural gas project north of Paria that has long been shelved. Bar a possible upfront fee, Maduro likely won’t receive funds from sales until late 2024 or early 2025 (about $10-15m a month initially, Monaldi estimates). It’s not a significant amount, but Venezuela will start to monetize gas resources after years of corruption and mismanagement that left volumes of energy infrastructure obsolete.

What’s Maduro saying about Hamas’ attack and the Israeli offensive?

Following Hamas’ attack, Casa Amarilla stated that “recent events in Gaza” were the result of Palestinian helplessness in asserting their rights within existing multilateral frameworks. The Venezuelan Foreign Ministry also called Israel to end occupation on the grounds of a UN Security Council resolution. Maduro has voiced that the IDF’s response in Gaza corresponds with genocide, calling international actors to hold a “world conference” that establishes Palestinian statehood.Maduro’s rhetoric is in line with chief allies like Russia and China, who claim to be promoting a ceasefire and a two-state solution. He has endorsed Erdogan as the conflict’s mediator, and hasn’t mentioned Hamas when he talks about the war. Maduro portrays Palestine as a victim of the U.S. and the West, in terms analogous to the regime’s idea that Venezuela is victim to U.S.-led blockades and “economic warfare”. Finally, Maduro stated that Jewish oligarchies that governed the region were the ones that sentenced and crucified Jesus –“the first anti-imperialist, a Palestinian”. On October 10, El Cooperante reported that the 2020 National Assembly gave a one-year suspension to deputy lawmaker Octavio Orta for condemning Hamas’ attacks.